Liquidity issue not to ease out soon: Experts

Speaking on the fear of the markets going below the October low, Rajesh Jain of Pranav Securities said the catastrophe of October 27 happened because of sharp concentrated selling and global concerns coming together at the same time. “That is something that happens once in two to three months, you had that event in July when we came very close to the 3,750 mark and then again on the October 27. I would not rate the probability of that coming together in such a sharp manner yet again,” he said.

Jain feels that in a run up to the end of the current calendar year, one will see a lot of balance sheet cleaning up process particularly as an outcome of the financial failures in the West. “Every time you have this clean up exercise going on, there will be spikes in the FII selling activity and all that in addition to the fresh adventurous shorts which always emerge in a markets from a crucial level like 3,200, they will tend to take the market down but I will still maintain that it will be very surprising if we go towards sub 2,250 level,” he said.

Jain, with respect to the IIP numbers, said, "I do not think the IIP had anything new to tell us even though it was marginally better figure over the last month. Year on Year it was negative and I think the street has better evidence in the form of forced shutdowns on large industrial units. What better way to tell people that offtake is poor and hence production has to be cut."

Jain thinks that the present crisis is a crisis of confidence and there does not seem to be any stopping or any midpoint landing where people can say the worst seems to be getting better now and so let at least start buying in parts.

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